The Failures of For-Profit Nursing Homes

The Centers for Medicare & Medicaid Services recently published a report analyzing approximately 16,000 nursing homes in this country and assigned each a rating – from one star to five stars – based on such criteria as health inspections and staffing.

In a less prolific blow than the other shots to the head delivered in 2008 to the theory that an unfettered free market is always the best answer, approximately 27 percent of for profit homes surveyed were given one star, versus 13 percent of non-profit homes. At the top of the nursing home food chain, 19% of non-profit homes were awarded five stars, compared with 9 percent of for profit homes. From this pretty overwhelming data, it is hard to argue that for profit nursing homes provide an equal level of nursing home care to that of non-profit homes. While I am not sure what the profit to non-profit nursing home ratio is in Maryland, I don’t think this conclusion shocks a single Maryland nursing home lawyer. The vast majority of nursing home cases are against private, for profit nursing homes.

Impact of the Profit Motive on Nursing Home Care

The big cost of nursing homes is staffing. To maximize profits you want to pay people as little as possible and you want to get by with as little staffing as you can. So we have not enough people and not enough qualified people to care for and protect these elderly residents.

It does not take a rocket scientist to figure out how this goes down. The nursing home increases its profit by keeping few employees. As a result, its residents do not get properly assessed, evaluated, and treated. What does that cause? Unnecessary hospitalizations. Is this something the nursing homes want to desperately avoid, knowing that its costs billions of dollars a year in unnecessary costs? Not really. Because when that patient returns, the nursing home might be eligible to make even more money by charging the insurance company or Medicare post-hospitalization prices. It is a vicious circle and it is a mess.

The Bigger Picture

As far as economic systems go, capitalism is approximately one trillion times better than socialism. But providing this one-size-fits-all axiom to every microeconomic equation is going to lead to error. Why does it seem to fail for nursing homes? I don’t know. But my hypothesis is that nursing homes that operate for profit focus too much on the for profit side of the equation at the expense of the patient. I think you are seeing that with these big nursing home chains in Maryland like FutureCare and ManorCare.

Now, if this logic holds up for all health care related fields, we should have every health care provider and ever pharmaceutical company set up as a non-profit. I think such a system would be a complete disaster.

So why are assisted living type facilities different? Well, I think the free market economy works best when there are natural transparent ways for checks and balances. When a drug fails its recipients, the drug company can expect two things: lawsuits and media coverage which harm profitability. Nursing homes that neglect and abuse the people entrusted to them too often slip by unscathed so they do not spend the time, effort and money to create the systems to prevent inadequate care.

What can be done? I know that the Centers for Medicare and Medicaid Services (CMS) has tried to develop a pay-for-performance in Medicare payments for nursing homes. But that is a tough road. You develop a system and then the sole goal becomes to work the system.

Getting a Nursing Home Attorney in Maryland

Have you or a loved one been injured or harmed by a nursing home. You need someone who will not only be in your corner but will fight for you. Call Miller & Zois at 410-779-4600 or get a free on-line consultation to learn about your options really are and what can be done for you.

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